Internal Control Policies and Procedures Have Limitations Including

question 48

Multiple Choice

Internal control policies and procedures have limitations including:

• A) Human error.
• B) Human fraud.
• C) Cost-benefit principle.
• D) Collusion.
• E) All of these.

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Definitions:

Predetermined Overhead Rate

An established cost allocation rate that assigns expected indirect costs to products or services based on a chosen activity base.

Level of Activity

The volume or scale of operation in a business, often influencing costs and efficiency, such as the number of units produced or sold.

Cost of Unused Capacity

The costs incurred for not utilizing production or service capacity to its fullest potential.

Period Expense

Costs that are not directly related to production and are charged as expenses in the period they occur.